I am assuming that you received none of the proceeds of the sale of the property. Is that correct?
Even though you received none of the proceeds of the sale of the property, you will report the IRS form 1099-S because the IRS is expecting to see the information on your Federal 1040 income tax return.
On the IRS form 8949 you will report the cost basis as the same as the proceeds of the IRS form 1099-S. You will report a net $0 income on your Federal 1040 income tax return.
IRS form 1099-S Proceeds from Real Estate Transactions may report:
- Your main home,
- A second home,
- A vacation home,
- Land,
- Residential rental property, or
- Real property recorded as a business asset.
The tax treatment of each of these transactions differ. Sale of a second home, an inherited home or land are considered investment sales.
In TurboTax Online Premier, follow these steps to report the sale:
- Click on the Search magnifying glass and enter sale of second home.
- Click on the Jump to sale of second home link.
- Click on Add investments.
- At the screen Let's import your tax info, click on Enter a different way.
- At the screen OK, let's start with one investment type, select Other and click Continue.
- At the screen Tell us more about this sale, enter the name. Click Continue.
- At the screen Now, enter one sale….., enter the information.
- At the box Fair market value when previous owner passed away, enter the same dollar amount of the Proceeds.
- Click Continue.
- At the screen Let us know if any of these situations apply to this sale, answer None of these apply. Click Continue.
The entry will be reported:
- on Schedule D of the Federal 1040 tax return, and
- on line 7 of the Federal 1040 tax return.
Retain copies of all the paperwork associated with the second home in your tax papers. It is possible that a tax authority will contact you at a later time and ask about the IRS form 1099-S income.
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